06.05.2021 • 13/2021
IWH Bankruptcy Update: Upward Trend in Bankruptcies Stopped; Reintroduction of Filing Requirement Unlikely to Generate Bankruptcy Wave
Following a rising trend in recent months, the number of corporate bankruptcies fell significantly in April. The number of impacted jobs also remained at modest levels. After a recent sharp rise in the bankruptcy statistics for microbusinesses (which has drawn little press attention), the upward trend for this subcategory loses steam. These are the key findings of the IWH Bankruptcy Update, which provides monthly statistics on corporate bankruptcies in Germany.
Steffen Müller
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Deposit Competition and Mortgage Securitization
Danny McGowan, Huyen Nguyen, Klaus Schaeck
Abstract
We study how deposit competition affects a bank’s decision to securitize mortgages. Exploiting the state-specific removal of deposit market caps across the US as a source of competition, we find a 7.1 percentage point increase in the probability that banks securitize mortgage loans. This result is driven by an 11 basis point increase in deposit costs and corresponding reductions in banks’ deposit holdings. Our results are strongest among banks that rely more on deposit funding. These findings highlight a hitherto undocumented and unintended regulatory cause that motivates banks to adopt the originate-to-distribute model.
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15.04.2021 • 12/2021
Economy in East Germany shrank less than in the West, but will have weaker momentum when pandemic disappears – Implications of the Joint Economic Forecast Spring 2021 and new data for East Germany
At 3%, the increase in gross domestic product in eastern Germany in 2021 is likely to be lower than in Germany as a whole (3.7%), as the slump due to the pandemic was smaller in 2020. In the course of the economic recovery in the second half of the year, the unemployment rate is expected to fall slightly.
Oliver Holtemöller
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15.04.2021 • 11/2021
Pandemic delays upswing – Demography slows growth
In their spring report, the leading economic research institutes forecast an increase in gross domestic product of 3.7% in the current year and 3.9% in 2022. The renewed shutdown is delaying the economic recovery, but as soon as the risks of infection, particularly from vaccination, have been averted, a strong recovery will begin. The economy is likely to return to normal output levels around the start of the coming year.
Oliver Holtemöller
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Staggered Completion of the European Banking Union: Transposition Dates of the BRRD
Michael Koetter, Thomas Krause, Eleonora Sfrappini, Lena Tonzer
IWH Technical Reports,
No. 1,
2021
Abstract
In May 2014, the European Commission published the Bank Recovery and Resolution Directive (BRRD). The directive introduces rules on bank resolution and restructuring including a bailin tool. It constitutes the legal foundation underlying the Single Resolution Mechanism (SRM). Member countries of the European Union (EU) had to transpose this directive into national law by 31 December 2014 and implement the rules on resolution and restructuring of failing banks from 1 January 2015 onwards. However, many countries delayed the implementation. We assemble a dataset on national transposition dates of the BRRD across the EU-27 countries.
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08.04.2021 • 10/2021
IWH Bankruptcy Update: Bankruptcy Statistics Rise Again in March
The number of firms declaring bankruptcy in Germany increased once again in March. However, the number of jobs impacted by the bankruptcy of large firms remained constant. The IWH Bankruptcy Report, published by the Halle Institute for Economic Research (IWH), provides a monthly update on German bankruptcy statistics.
Steffen Müller
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Power Generation and Structural Change: Quantifying Economic Effects of the Coal Phase-out in Germany
Katja Heinisch, Oliver Holtemöller, Christoph Schult
Energy Economics,
2021
Abstract
In the fight against global warming, the reduction of greenhouse gas emissions is a major objective. In particular, a decrease in electricity generation by coal could contribute to reducing CO2 emissions. We study potential economic consequences of a coal phase-out in Germany, using a multi-region dynamic general equilibrium model. Four regional phase-out scenarios before the end of 2040 are simulated. We find that the worst case phase-out scenario would lead to an increase in the aggregate unemployment rate by about 0.13 [0.09 minimum; 0.18 maximum] percentage points from 2020 to 2040. The effect on regional unemployment rates varies between 0.18 [0.13; 0.22] and 1.07 [1.00; 1.13] percentage points in the lignite regions. A faster coal phase-out can lead to a faster recovery. The coal phase-out leads to migration from German lignite regions to German non-lignite regions and reduces the labour force in the lignite regions by 10,100 [6300; 12,300] people by 2040. A coal phase-out until 2035 is not worse in terms of welfare, consumption and employment compared to a coal-exit until 2040.
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11.03.2021 • 8/2021
New wave of infections suspends economic recovery
The lockdown is being eased only slightly in Germany in March 2021, and gross domestic product (GDP) declines significantly in the first quarter of 2021. As vaccination campaigns progress and restrictions are gradually eased, a normalisation of household consumption patterns will likely boost the economy later during the year. The Halle Institute for Economic Research (IWH) forecasts that GDP will increase by 3.7% in 2021, following a decline of 4.9% in 2020. In East Germany, both the contraction and the rebound are much less pronounced.
Oliver Holtemöller
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Income Inequality and Minority Labor Market Dynamics: Medium Term Effects from the Great Recession
Salvador Contreras, Amit Ghosh, Iftekhar Hasan
Economics Letters,
February
2021
Abstract
Using a difference-in-differences framework we evaluate the effect that exposure to a bank failure in the Great Recession period had on income inequality. We find that it led to a 1% higher Gini, relative rise of 38 cents for high earners, and 7% decline for lowest earners in treated MSAs. Moreover, we show that blacks saw a decline of 10.2%, Hispanics 9.8%, and whites 5.1% in income. Low income blacks and Hispanics drove much of the effect on inequality.
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Real Estate Transaction Taxes and Credit Supply
Michael Koetter, Philipp Marek, Antonios Mavropoulos
Deutsche Bundesbank Discussion Paper,
No. 4,
2021
Abstract
We exploit staggered real estate transaction tax (RETT) hikes across German states to identify the effect of house price changes on mortgage credit supply. Based on approximately 33 million real estate online listings, we construct a quarterly hedonic house price index (HPI) between 2008:q1 and 2017:q4, which we instrument with state-speci c RETT changes to isolate the effect on mortgage credit supply by all local German banks. First, a RETT hike by one percentage point reduces HPI by 1.2%. This effect is driven by listings in rural regions. Second, a 1% contraction of HPI induced by an increase in the RETT leads to a 1.4% decline in mortgage lending. This transmission of fiscal policy to mortgage credit supply is effective across almost the entire bank capitalization distribution.
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